Guj proposes VAT raise to tide over octroi abolition

Gandhinagar, Feb 25 (UNI) Gujarat Government today proposed to raise the four per cent VAT between one to 2.5 per cent for mobilising financial resources and accelerating the development process.

Presenting the State Budget today, Gujarat Finance Minister Vajubhai Vala said the proposal will fetch an additional Rs 880 crore to the State.

The increased taxes will also be used to finance the seven big civic bodies, who are facing financial crunch due to abolition of octroi last November.

An increase of one per cent has been proposed for important commodities such as medicines, whereas for all other items, taxes would be increased by 2.5 per cent.

The additional tax will not apply to petrol, diesel, declared goods and exempted goods, the Finance Minister added.

While moving the proposal, Mr Vala said that the State has decided to give priority to the development of Human Resources and infrastructure for the balanced economic and social growth.

The State Government has fixed the annual plan for 2008-09 at Rs 19,030 crore.

The government has also allowed the civic bodies to levy, collect and retain professional tax. At present these bodies are collecting professional tax on behalf of the State Government and receiving collection charges.

The new measure will enhance the civic bodies income by Rs 120 crore. He said a bill amending the Gujarat State Tax on Professions trades, Calling and Employment Act 1976, will be presented in the State Assembly during the current session.

Mr Vala said tax credit will be allowed on additional tax and a bill proposing necessary amendments in the Gujarat Value Added Tax Act, 2003 will be made in the current session of the assembly.